2015 (1) TMI 787 - AT - Income Tax

Unaccounted gifts - Addition made by CIT(A) - Held that - From the above facts and circumstances, we find that even if the prayer of Ld. A.R. is accepted for readjudication, no fruitful purpose will be served as already a period of more than 12 years has passed after giving the so called gift and it is not possible that donor will recollect all things which he had not been able to answer after a period of 6 years from the date of making gifts. Further, we find that Ld. A.R. during proceedings before lower authorities or before us could not bring to our notice any other additional evidence other than already on record by which he would be able to prove genuineness and creditworthiness of donor. As find from the documents on record creditworthiness of donor and genuineness of gift is not proved because the assessee had no direct relationship with the donor and in the absence of any direct relationship, natural love and affection between the donor and donee was not established and neither any proof was filed before the authorities below or before us to substantiate that parties had extraordinary relationship. The donor himself has stated that he had been into export business up to 2003 which was closed due to losses. We are aware that a business is closed only after consistent losses in various years and therefore, a person who had incurred losses cannot be expected to give a gift to an unknown person and that too of a huge amount of ₹ 25 lacs. The donor had not given any gift to his close relatives including his brothers, sisters etc.. Cheques of gift were issued against cash deposited in the bank account and the cash was stated to be lying at home which is again against human probabilities. The donor had stated that cash was deposited out of cash lying at home and he had submitted that he does not remember the source of the said cash. - Decided against assessee.

Issues Involved:

1. Genuineness and creditworthiness of the gift of Rs. 25 lacs received by the assessee.
2. Opportunity for cross-examination of the donor.
3. Legality of the assessment under Section 153A without incriminating material.

Detailed Analysis:

1. Genuineness and Creditworthiness of the Gift:

The primary issue in this case revolves around the genuineness and creditworthiness of a Rs. 25 lacs gift received by the assessee. The assessee initially claimed that the gift was received from two individuals, but later corrected this to state that both gifts were from Shri Anil Kumar Gupta. The Assessing Officer (A.O.) questioned the genuineness of the gift due to inconsistencies in the donor's statements and the circumstances surrounding the gift.

During assessment proceedings, the A.O. noted discrepancies such as the donor not knowing the donee's name, the donor's lack of knowledge about the donee's business, and the fact that the donor deposited equivalent amounts of cash before issuing the cheques. The A.O. concluded that the donor's creditworthiness and the genuineness of the gift were not proven, leading to an addition under Section 68 of the Income Tax Act.

The CIT(A) upheld the A.O.'s decision, emphasizing that the donor was unaware of the donee's identity and business details, and the donor had not made similar gifts to close relatives. The CIT(A) also noted that the cash deposits before issuing the gift cheques were suspicious and that the donor's financial condition, given his business losses, did not support the capacity to make such a large gift.

2. Opportunity for Cross-Examination:

The assessee argued that they were not given an opportunity to cross-examine the donor, Shri Anil Kumar Gupta, which violated the principles of natural justice. The A.O. recorded the donor's statement in the absence of the assessee or their representative, which the assessee claimed was done under stress and without legal aid.

The CIT(A) rejected this contention, stating that the assessee did not request cross-examination during the assessment proceedings and that the affidavits submitted by the assessee and their counsel were self-serving. The CIT(A) also noted that the statement was recorded in the presence of the assessee's counsel, as per the order sheet entry.

The Tribunal found that remanding the case for cross-examination would not serve any useful purpose, given the significant time lapse since the gift was made and the lack of new evidence to support the assessee's claims.

3. Legality of the Assessment under Section 153A:

The assessee briefly raised an issue regarding the legality of the assessment under Section 153A, arguing that the addition was not based on any incriminating material. However, this argument was not pursued in depth, as the primary focus was on the genuineness and creditworthiness of the gift.

Conclusion:

The Tribunal upheld the CIT(A)'s decision, dismissing the assessee's appeal. The Tribunal agreed that the assessee failed to prove the genuineness and creditworthiness of the gift, citing the lack of direct relationship between the donor and donee, the donor's financial incapacity, and the suspicious nature of the cash deposits. The Tribunal also found no merit in the assessee's claim of being denied the opportunity for cross-examination, given the circumstances and the time elapsed. The order pronounced on 09th January 2015 confirmed the addition of Rs. 25 lacs as unexplained credit under Section 68 of the Income Tax Act.

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